EEOC vs Kaplan: Appeals Court Rules against the EEOC

gavel and law book

In a move that employers who rely on background checks in hiring can appreciate, on April 9, 2014, the U.S. Court of Appeals for the Sixth Circuit issued a unanimous summary judgment in favor of Kaplan Higher Education Corporation, ruling against the EEOC. Some background on the case:

In December 2010, the EEOC filed a lawsuit that alleged Kaplan’s credit checks, used in its hiring process, screened out more African-American than white applicants, causing a disparate impact in violation of Title VII of the Civil Rights Act of 1964. Key testimony used in the case was from an EEOC expert witness who used analytical methods that the judge deemed unreliable. And the EEOC’s case was dismissed.

The EEOC decided to appeal the case. In its ruling a few days ago, the Sixth Circuit affirmed the opinion of the U.S. District Court in the Northern District of Ohio. In addition to upholding that the analytical methods were unreliable, in the court’s opinion statement, Judge Kethledge wrote:

“In this case the EEOC sued the defendants for using the same type of background check that the EEOC itself uses. The EEOC’s personnel handbook recites that “[o]verdue just debts increase temptation to commit illegal or unethical acts as a means of gaining funds to meet financial obligations.” Because of that concern, the EEOC runs credit checks on applicants for 84 of the agency’s 97 positions. The defendants (collectively, “Kaplan”) have the same concern; and thus Kaplan runs credit checks on applicants for positions that provide access to students’ financial-loan information, among other positions. For that practice, the EEOC sued Kaplan.”

Employers should appreciate the rulings on this case for two reasons. First, it shows that the courts are not on board with the hypocrisy of a government entity suing a private employer for a practice that it itself uses. And second, it demonstrates that when a lawsuit is brought to court, the methodology used to prove the allegations must be reliable, not just something developed specifically for the purposes of litigation.

While this is good news for employers, other litigation against employers by the EEOC regarding the use of criminal background checks is still pending. It’s important to continue to monitor the progress and results of these cases.

FTC Reports: Two Data Brokers Settle FTC Charges

Background Screening Lawsuit

Employers are not the only ones under a microscope when using background checks. The Federal Trade Commission (FTC) also continues to target background screening companies, even those that do not consider themselves to be consumer reporting agencies (CRA).

In an April 9, 2014 press release, the FTC announced that Instant Checkmate, Inc. and InfoTrack Information Services agreed to settle FTC charges that they violated the Fair Credit Reporting Act (FCRA). The companies provided consumer reports “without taking reasonable steps to make sure they were accurate, or without making sure their users had a permissible reason to have them.”

In both cases, the companies offered reports for employers, and Instant Checkmate also offered reports for landlords. Although the companies in question may not have considered themselves to be CRAs, the FTC figured differently, and claimed in these cases that what they were doing triggered the FCRA and they should be responsible for upholding it.

The two separate cases are summarized below:


Instant Checkmate, Inc.

On its website,, people can search public records for information. Although Instant Checkmate said on its website that it wasn’t a CRA, it did market the reports for purposes  As part of the complaint, the FTC claimed that the company markets its services to landlords and employers that it qualified as a consumer reporting agency (CRA) because it provided “background reports that it expected would be used for the purpose of determining eligibility for housing and employment.”

Allegations against the company in the complaint included:

  • The company failed to maintain reasonable procedure to ensure people who accessed them had permissible purposes for doing so,
  • It provided reports to users who it believed did not have permissible purposes,
  • Report accuracy was not ensured, and
  • The company did not provide consumer protection notices as mandated by the FCRA.

The court order imposes a $525,000 fine against the company and prohibits it from:

  • “Furnishing consumer reports to anyone who does not have an FCRA-defined permissible purpose;
  • “Failing to maintain reasonable procedures to limit the furnishing of reports to people with permissible purposes;
  • “Failing to maintain reasonable procedures to assure the maximum possible accuracy of the reports; and
  • “Failing to provide User Notices.”


InfoTrack Information Services, Inc.

InfoTrack provides background screening reports to employers throughout the country, and reports include criminal records, education and employment information, and driving records. The complaint alleged “InfoTrack and its owner, Steve Kaplan, violated the FCRA by failing to use reasonable procedures to assure maximum possible accuracy of consumer report information obtained from sex offender registry records; failing to provide FCRA-required notices; and failing to provide written notices to consumers of the fact that InfoTrack reported public record information to prospective employers, when that information was likely to adversely affect consumers’ ability to obtain employment.”

In addition to a $1 million fine imposed on the company and its owner (note, all but $60,000 was suspended because the company is unable to pay) , the court ordered the company to comply with the FCRA by:

  • “Maintaining reasonable procedures to assure the maximum possible accuracy of consumer report information;
  • “Providing required FCRA notices; and
  • “Notifying consumers when InfoTrack has provided public record information about them that is likely to have an adverse effect upon their ability to obtain employment.”

An FCRA blog on these cases cautions companies providing background information that even if they don’t consider themselves to be a CRA, if they provide that type of information, the FTC could consider them to be CRAs. So companies have now been warned.

And accuracy of information remains a sticking point for the FTC. As we’ve shared in previous blogs, in order to make informed decisions employers require accurate information. There’s no other way around it.

Corporate Screening’s background investigations are done in strict adherence of the FCRA for clients with signed agreements. If you would like to learn more about how we can help you evaluate or establish a background screening program, contact us at 800-229-8606 or email us at

Rhode Island Schools: Tighter Background Checks

School background checks

A bill requiring national background checks on contract employees and employees of third party contractors working with Rhode Island school districts was recently passed by the Rhode Island House chamber. According to the East Greenwich Patch, the bill was enacted to close a loophole that was discovered after an incident in November 2013, when a school bus monitor was charged with possessing and sharing child porn. The monitor worked for a third-party contractor, and state law only required national background checks on direct employees of public and private schools and school districts.


The bill is on its way to the state Senate.

Another Case of False Information Exposed

Background Check Resume Lies

Every once in a while, someone in the public eye gets caught in a lie about their credentials. Earlier this week, Manhattan College men’s basketball coach Steve Masiello lost a chance to become coach at South Florida after a background check revealed he had not actually graduated from Kentucky, as his resume had claimed.  Yahoo! Sports reported that Masiello is on leave while Manhattan College investigates this matter.

Unfortunately, it’s not just a few people who lie on their resume. Lying about qualifications is more common that we would like it to be. A Corporate Screening blog posted in 2010 shared information that many applicants were lying on their resumes, and it appears that people lying on their resumes won’t go away any time soon.

Employers, it’s important to verify the claims your candidate makes. A thorough background check helps protect you from hiring people who are unqualified, and can also deter employee theft and negligent hiring lawsuits. Corporate Screening can help by tailoring a background screening program to meet your organization’s needs.

Expanded "Ban the Box" Bill Approved in Baltimore

Ban The Box

A recent article in the Baltimore Sun reports that Baltimore’s city council voted unanimously to expand the city’s 2007 law that “bans the box” from government applications to private employers. Private employers with 10 or more workers, “including contractual, temporary or seasonal workers” would be required to eliminate the question on employment applications and delay background checks “until an applicant had an opportunity to interview for the job or had received a conditional job offer.”

The bill’s lead sponsor, Councilman Nick J. Mosby said that “he was prompted to sponsor the legislation because of the many calls he gets from former convicts desperate for work. More than half of offenders released from Maryland’s prisons return to live in Baltimore.”

Before becoming law, the ban the box bill still needs a final vote and must be signed by the Mayor, Stephanie Rawlings-Blake.

Photo Source: JJS Photo

FTC and EEOC Provide Employment Background Check Tips


A recent Federal Trade Commission (FTC) press release promotes two new guides on employment background checks. The guides were jointly developed by the FTC and the Equal Employment Opportunity Commission (EEOC), and explain the rights and responsibilities of employers in addition to those of applicants.

The employer brochure, Background Checks: What Employers Need to Know provides companies using background screening companies for investigative reports (background checks) with guidelines that include:
• Informing the applicant or employee in writing that background information may be used to for employment decisions.
• Requiring written permission before the background check.

Additionally, the brochure contains a warning from the EEOC, telling employers that “it’s illegal to discriminate based on a person’s race, national origin, sex, religion, disability, or age (40 or older) when requesting or using background information for employment.”

The job applicant and employee brochure, “Background Checks: What Job Applicants and Employees Should Know,” informs applicants that “it’s not illegal for potential employers to ask someone about their background as long as the employer does not unlawfully discriminate. Job applicants also should know that if they’ve been turned down for a job or denied a promotion based on information in a background report, they have a right to review the report for accuracy.”

Click on the links to read the press release and the brochures. Additionally, Corporate Screening has posted pdf copies of both brochures on our website in the Resources section under the section “Important Links and Resources.”

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